idnu 


Ouke   University   Libraries 

Confederate  Sta 
Conf  Pam  #628 

DTTD7D75T3 


.  ■       7 


CONFEDERATE  STATES  LOAN. 

• 


HOLMES'  , 


PLAN  OF  ARRANGEMENT. 


RICHMOND: 

CHAS.  11.  WYNNE,  PRINTER,  94  MAIN  STREET. 

1861. 


THE 

WILLIAM  R.  PERKINS 

LIBRARY 

OF 

DUKE  UNIVERSITY 


Rare  Books 


OBJECTIONS  TO  A  SINKING  FUND. 


1st.  It  requires  an  annual  legislative  provision  of  ever- 
changing  legislators,  and  may  therefore  be  pretermitted. 

2d.  If  provided,  the  sum  may  not  be  applied  immediately 
in  redemption  of  a  portion  of  the  debt  and  reduction  of  the 
interest  hearing  principal. 

3d.  It  may  be  invested  in  other  securities  of  fluctuating 
value,  which  in  a  long  series  of  years  may  be  greatly  depre- 
ciated, or  even  become  valueless. 

4th.  If  securely  invested,  must  be  sold  at  the  period  for 
redemption  of  the  debt  and  probably,  because  in  large  amounts, 
at  greatly  depreciated  rates,  and  consequent  loss. 

5th.  Commissioners  of  the  sinking  fund  are  frequently,  if 
not  periodically,  changed,  and  with  each  varying  set  there 
may  be  a  varied  policy  pursued  with  the  fund. 

6th.  The  places  of  commissioners  every  way  qualified  may 
be  supplied  by  others  in  some  or  all  of  the  requisites  totally 
deficient. 

7th.  Under  the  most  favorable  circumstances  it  is  impossible 
that  the  investment  of  the  fund  can  be  punctually  and  securely 
made  to  Accumulate  at  any  required  rate  of  compound  interest 
without  loss  of  time,  and  consequent  loss  of  interest,  so  as  to 
produce  the  exactly  mathematically  calculated  sum  that  will 
redeem  the  debt  at  the  required  period  of  time. 

8th.  If  each  and  all  of  the  foregoing  objections  were 
removed,  and  the  fund  Avas  properly  invested  so  as  to  produce 
the  calculated  result,  still,  as  much  experience  has  already 
shewn,  sinking  funds,  when  accumulated,  have  often  been 
diverted  by  the  very  government  or  power  which  directed  its 


accumulation  to  objects  deemed  of  pressing   necessity,  thus 
defeating  entirely  the  original  design. 

0th.  No  purchasing  at  discount  any  part  of  the  debt  should 
be  contemplated ;  the  bare  idea  casts  in  advance  a  shadow  of 
suspicion,  and  the  realization  of  the  idea  is  the  substance  itself 
of  a  depreciated  credit — totally  unworthy  even  of  an  individual, 
positively  disgraceful  to  a  government. 


HOLMES'  PLAN 


ARRANGEMENT  OF  CONFEDERATE  STATES  LOAN. 


To  arrange  one  hundred  millions  of  dollars,  so  that  hotli  the 
principal  and  the  interest  thereof  shall  be  paid  in  18  years  by 
thirty-six  semi-annual  appropriations,  each  of  five  millions,  t\fo 
hundred  and  eighty-eight  thousand  six  hundred  and  eighty- 
eight  dollars  ($5,288,088),  or  18  annual  appropriations,  each 
of  ten  millions  five  hundred  and  seventy-seven  thousand  three 
hundred  and  seventy-six  dollars  (^  10,577,376). 

If  the  entire  principal  of  the  debt  was  payable  at  the 
expiration  of  18  years,  and  only  the  interest  at  the  rate  of 
8  per  cent,  per  annum  was  payable  semi-annually,  then  the 
simple  interest  of  8  per  cent,  for  one  year  on  $  100,000,000 
■would  be  eight  millions  of  dollars,  and  the  aggregate  simple 
interest  for  18  years  would  be  one  hundred  and  forty-four 
millions  of  dollars,  $  144,000,000 

To  which  add  payment  of  the  principal,  100,000,000 

And  in  18  years  there  would  be  paid  interest 

and  principal,  $244,000,000 

Whereas  by  the  plan  proposed 

there  would  in  the  same  time 

be  paid  the  principal,  $  100,000,000 

And    all    the  interest,  which 

would  be  only  90,392,708 

And  there  would  be  saved  of 

interest  53,607,232 


$244,000,000 

Thus  saving,  in  18  years,  fifty-three  millions,  six  hundred 
and  seven  thousand  two  hundred  and  thirty-two  dollars. 


If  the   31100,000,000  bore  interest  of  only  six  per  cent,  it 
^ould  require  of  simple  interest  for  18  years   §108,000,000 

And  at  the  expiration  of  the  time  to  pay  prin- 
cipal, 100,000,000 

Making  an  aggregate  of  $208,000,000 

Whereas,  by  the  proposed  plan,  even  ■where  the 
interest  is  8  per  cent,  per  annum,  payable  semi- 
annually, the  sum  required,  as  etatcd  above,  is 
only  6100,302,768 

And  the  amount  saved  would,  even  then,  be         $17,007,232 

By  the  plan,  a  certain  portion  only  of  the  principal  and 
all  of  the  interest  on  the  outstanding  balance  of  the  principalj 
■would  be  payable  at  each  period  of  six  months,  and  the  sum 
required  to  accomplish  this  at  each  period,  is  the  uniform  sum 
of  five  millions  two  hundred  and  eighty-eight  thousand  six 
hundred  and  eighty-eight  dollars — making  an  annual  aggregate 
of  $10,577,376. 

It  will  be  readily  perceived  that,  by  the  plan,  as  the  interest 
is  diminished  at  each  period  of  six  months,  because  of  the  pay- 
ment on  the  principal  at  the  preceding  period,  that  therefore 
the  uniform  sum  appropriated,  enables  more  of  principal 
to  be  paid  at  each  period  than  at  the  next  previous  period. 

The  rate  of  interest,  the  entire  time  within  which  the 
principal  is  to  be  paid,  and  the  aggregate  amount  of  the 
principal  of  the  debt  being  fixed,  it  is  easy  to  arrange  the 
plan. 

In  the  present  instance,  the  amount  of  principal,  the  rate  of 
interest,  and  the  time  within  which  the  principal  is  to  be  paid, 
are  understood  to  be  those  most  desirable  to  the  government. 
The  interest  must,  of  course,  be  punctually  paid  every  six 
months,  from  the  time  the  debt  is  contracted.  But  the 
payment  of  the  first  portion  of  the  principal  may  be  postponed 
to  any  convenient  time.  When  the  payment  of  the  princi- 
pal has  once  commenced,  the  plan  requires  that  every  six 
months  thereafter,  there  shall  be  payable  and  paid  the  exact 
amount  fixed  for  the  period. 

It  will  be  perceived,  that  if  the  war  debt  does  not  exceed 


one  hundred  millions,  then  the  annual  appropriation  for  18 
years  to  pay  both  that  debt  and  the  interest  thereof  will  be 
the  uniform  sum  of  a  little  over  ten  and  a  half  millions  of 
dollars.  If  to  this  there  was  added  fourteen  and  a  half 
millions  for  the  annual  expenses  of  the  Government,  adminis- 
tered as  it  should  be  upon  economical  principles,  then  the 
aggregate  annual  revenue  for  the  next  18  or  20  years  need 
not  exceed  twenty-five  millions  of  dollars. 

The  annual  exports  to  foreign  countries,  including  the 
United  States,  may,  in  time  of  peace,  be  reasonably  assumed 
at  two  hundred  and  fifty  millions,  and  placing  the  imports, 
which  are  always  in  excess  of  the  exports,  at  the  same,  we 
have  an  annual  aggregate  for  both,  of  five  hundred  millions, 
upon  which  an  average  annual  duty  of  5  per  cent,  would  raise 
the  sum  required. 

The  duty  of  ^  of  one  cent  per  pound  on  4,000,000  of  bales 
of  cotton  of  450  pounds  each,  would  be  $  2,250,000 — a  sum 
that  would  pay  both  the  principal  and  interest  of  the  loan  of 
fifteen  millions  in  ten  years,  and  leave  over  forty  thousand 
dollars  annually  to  defray  the  expenses  of  the  operation. 

One  cent  per  pound  on  cotton,  assuming  1,800,000,000 
pounds,  would  give  18  millions  of  dollars.  The  cent  per  pound 
would  be  y'o  of  ten  cents  per  pound,  or  if  that  was  the  value  of 
cotton  ten  per  cent,  upon  its  value.  Extend  these  figures  and 
remarks  to  all  other  productions  for  export,  and  we  may  well 
congratulate  ourselves  that  our  annual  products  can  be  ar- 
ranged to  meet  our  debts  and  our  wants,  and  that  there  will  be 
no  necessity  to  call  upon  citizens  for  any  portion  of  their 
capital. 

JAMES  G.  HOLMES, 

Charleston^  South  Carolina. 


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